Congressional hearing on Microsoft Yahoo bid

February 2, 2008 6:15:12 PM PST

SAN FRANCISCO - February 2, 2008 --

The US Congress Judiciary Committee will hold a hearing next week to scrutinize Microsoft's multi-billion-dollar bid to acquire Yahoo in order to take on Internet goliath Google. Leading members of the committee scheduled a February 8 hearing after Microsoft's announced Friday it is courting California-based Yahoo with a 44.6-billion-dollar offer.

"Microsoft's bid to acquire Yahoo is certainly one of the largest technology mergers we've seen and presents important issues regarding the competitive landscape of the Internet," Congressmen John Conyers and Lamar Smith said in a written statement.

"The Committee will hear from experts who will weigh in on whether this proposed consolidation works to further or undermine the fundamental principles of a competitive Internet."

Conyers, a Democrat from the state of Michigan, heads the judiciary committee and Smith, a Republican from Texas, is a member.

The committee's Antitrust and Competitive Policy task force will hold the hearing to give the idea of a Microsoft-Yahoo merger "careful examination," the congressmen said.

Yahoo has yet to say whether it will accept the offer, but analysts believe it is too good a deal for the struggling Internet veteran to refuse and that US regulators are unlikely to find grounds to stop it.

The deal could reshape the landscape for high technology by combining Microsoft and one of the leading brands on the Internet.

The move comes as Yahoo is losing ground rapidly in the Internet space to Google, a search leader which has cashed in on the market for online advertising.

Yahoo would offer Microsoft a search engine to compete with Google's; a popular web portal for email, shopping and news, as well as one of the most recognized brands among online users.

Google is also ramping up offerings of on-demand online software that compete with Microsoft products.

"Google is moving more and more into Microsoft's territory and it was about time Microsoft went on the offensive," said Briefing.com analyst Kimberly DuBord.

Microsoft and Yahoo websites combined get 15.6 percent of all online traffic in the United States while Google gets 7.7 percent of Internet visits in the country, according to Hitwise statistics from the end of January.

When it comes to online searches, however, Google rules with 65.98 percent of the US market, Hitwise reported.

Google's dominance in search and the low barrier of entry into the market are expected to ameliorate antitrust concerns and clear the way for a Yahoo-Microsoft merger should such a deal be struck.

Microsoft said it believes the proposed combination would get a stamp of approval from regulators and be completed in the second half of 2008.